Affirm Soars 4.8% as Trump's APR Cap Proposal Ignites Fintech Optimism

Summary
• Trump's proposed 10% APR cap sparks bullish sentiment for BNPL firms like AFRM
• Mizuho and Wolfe Research highlight Affirm's potential amid tightening bank lending
• Jim Cramer endorses AFRM as a 'beneficiary' of regulatory shifts
• Intraday surge to $75.90 (up 4.83%) amid $72.05–$75.90 range

Affirm Holdings (AFRM) surged 4.83% to $75.28 in volatile trading, driven by President Trump's APR cap proposal and analyst optimism. The stock's sharp rebound from a 2.9% year-to-date decline reflects renewed confidence in the BNPL sector. With Mizuho and Wolfe Research emphasizing Affirm's competitive positioning and Cramer's vocal support, the stock is now testing key technical levels ahead of its February 5 earnings report.

Trump's APR Cap Proposal Sparks Fintech Optimism and Analyst Praise
President Trump's proposal to cap credit card APRs at 10% triggered a surge in Affirm's shares as analysts highlighted the BNPL sector's potential. Mizuho noted that tighter bank lending criteria could drive consumers to alternative lenders like Affirm, while Wolfe Research emphasized its 0% APR loan growth. Jim Cramer reinforced this narrative, calling Affirm a 'beneficiary' of the regulatory shift. The stock's 4.83% intraday gain reflects immediate optimism, though mixed momentum indicators suggest caution ahead of the February 5 earnings report.

Consumer Finance Sector Gains Momentum as Affirm Leads BNPL Rally
The consumer finance sector saw mixed momentum, with PayPal (PYPL) down 0.18% despite Affirm's rally. However, Affirm's 4.83% surge outperformed peers, driven by its BNPL focus and regulatory tailwinds. Mizuho's analysis and Cramer's endorsement positioned Affirm as a key beneficiary of shifting lending dynamics, contrasting with broader sector caution. The stock's performance underscores the BNPL segment's resilience amid macroeconomic uncertainty.

Options and ETF Plays for Affirm's Volatile Rally
• 200-day average: $67.36 (below current price)
• RSI: 41.02 (oversold)
• MACD: 0.98 (bullish divergence)
• Bollinger Bands: $69.999–$83.686 (current price near upper band)

Affirm's technicals suggest short-term consolidation above the 200-day average, with RSI indicating oversold conditions. The stock is trading near the upper Bollinger Band, suggesting potential for a pullback to the $74.78 Kijun line before resuming its bullish trend. For leveraged exposure, consider XLF (Financial Select Sector SPDR ETF) to capitalize on sector rotation.

Top Options Picks:
1. AFRM20260123C71 (Call, $71 strike, 1/23/26):
- Implied Volatility: 37.31% (moderate)
- Delta: 0.869 (high sensitivity)
- Theta: -0.372 (rapid time decay)
- Gamma: 0.051 (strong price sensitivity)
- Turnover: 26,050 (high liquidity)
- Leverage Ratio: 16.03% (moderate)
- Payoff at 5% upside ($79.04): $8.04/share
- This call option offers aggressive upside potential with high gamma and delta, ideal for short-term traders betting on a continuation of the rally.

2. AFRM20260123P70 (Put, $70 strike, 1/23/26):
- Implied Volatility: 54.44% (elevated)
- Delta: -0.167 (moderate bearish exposure)
- Theta: -0.026 (slow time decay)
- Gamma: 0.041 (moderate sensitivity)
- Turnover: 2,663 (reasonable liquidity)
- Leverage Ratio: 134.56% (high)
- Payoff at 5% upside ($79.04): $9.04/share
- This put option provides downside protection with high leverage, suitable for hedging against a potential pullback while retaining upside participation.

Action: Aggressive bulls may consider AFRM20260123C71 into a breakout above $76.84 (20-day MA). Conservative traders should watch for a consolidation above $74.78 before initiating long positions.

Backtest Affirm Holdings Stock Performance
The backtest of AFRM's performance following a 5% intraday increase from 2022 to the present shows favorable short-to-medium-term gains, with the 3-Day win rate at 50.40%, the 10-Day win rate at 48.19%, and the 30-Day win rate at 52.21%. The maximum return during the backtest was 11.50% over 30 days, indicating the strategy's effectiveness in capturing intraday volatility.

Bullish Momentum Intact—Position for Earnings Catalyst
Affirm's 4.83% surge reflects strong short-term optimism, but mixed momentum indicators suggest caution ahead of its February 5 earnings report. The stock's technical setup favors a consolidation above $74.78 before resuming its bullish trend. With the sector leader PYPL down 0.18%, Affirm's outperformance highlights its unique positioning in the BNPL space. Investors should monitor the 200-day average ($67.36) as a critical support level and watch for a breakout above $76.84 to confirm renewed momentum. Act now: Buy AFRM20260123C71 for aggressive upside or hold for a pullback to $74.78 before scaling into long positions.